Standard Life to Vanguard fund/sipp?

HarryM1

Hi all, I started a personal pension a couple of years back with Standard Life (MyFolio Managed IV fund), and have also opened a stocks/shares ISA with Vanguard on their LifeStrategy 80% fund.

Comparing the two funds:

• https://markets.ft.com/data/funds/tearsheet/performance?s=GB00B3SZ5K24:GBP
• https://markets.ft.com/data/funds/tearsheet/performance?s=GB00B4PQW151:GBP
  

The Vanguard fund over the last 5 years (10 if you compare on fidelity) appears to have either tracked slightly under or done quite a bit better then the SL fund (unlike their target retirement fund). SL annual charge is 1.4%, reducing to 1.1% on pots between 25-250k, whilst the Vanguard fund is 0.22% (0.42% all said if pension was with Vanguard) I'm thus considering a fund change and potentially a change from SL to Vanguard (depending on item 4 below).

After researching this a little I have a few remaining questions:-

1. The SL Personal Pension is 100% covered by FCSC as a "contract of long term insurance" unlike a SIPP which is only 100% of 85k (obviously not covering investment losses). How much should I factor that into any decision compared to charges/performance?
2. As I already have a S&S ISA in the Vanguard LS 80% fund, should I be concerned about putting my pension into the same fund? For example, there's a regional variation between the SL and Vanguard funds, 11% vs 36%, invested in the USA, but given how the funds have tracked each other, it seems that's not really making much difference from a diversification perspective.
3. Same fund aside, any real concerns having Pension and ISA on the same platform?
4. Anyone know just what the SL charges are for a SIPP with the Vanguard LifeStrategy 80% fund? Best I can find is the fund management charge of 0.22% (same as Vanguard) but I'm not sure what, if any, extra charges SL applies. I think this comes in as a Level1 fund? Surely SL have some extra charges on top of the fund and it's not an all in 0.22% cost which would make it cheaper than Vanguard? What am I missing?

A less and final consideration is that I lose the auto management of equity to bonds/cash that is applied on the SL pension fund as you near retirement. Is that really an issue though? Given the mixture of equity/bonds could be achieved through a combination of Vanguard LS % funds and chances are when I'm 10 or so years out from retirement I'd be paying for financial advice to go over other things so could likely receive assistance on that mix and annuity/drawdown etc

[Deleted User]

1. Not a meaningful benefit.
2. No. You are very well diversified by holding a single fund like VLS 80.  If you have a multi-asset fund which buys the world, the whole point is that its simple and you don’t need anything else.  You pay for it. Not much, but you do.  Having more than 1 fund is completely pointless. 

3. No.

4. https://www.standardlife.co.uk/pensions/personal-pension/sipp-charges

5. What is stopping you from adjusting your holdings as you are nearing retirement? Not sure I understand your concern. You could just sell vls 80 and buy vls 60 - or whatever you need.

In general, 5 year performance isn’t a good way to compare funds, but SL charges are too high so I would switch if I were you. 

HarryM1

Deleted_User said:

4. https://www.standardlife.co.uk/pensions/personal-pension/sipp-charges

I read through that prior to making the post, I think the VLS 80 fund comes under Level 1 and it _appears_ there is only the fund charge 0.22%. They mention "additional charges" however that is related to "fund managers", I take it that would be Vanguard in which case it's the same charges I see with my ISA (on vanguard platform) in the VLS 80 fund. Is there really no other charges applied by SL? i.e switching to a SL Level1 SIPP with VLS 80 fund would cost 0.22% annually as opposed to 0.22% + 0.15% platform fee on Vanguard (same additional charges on each)?
I just feel like I'm overlooking something here because it seems keeping the pension with Standard Life but converting to a SIPP and then investing in the VLS 80 fund would be the cheapest option.

5. What is stopping you from adjusting your holdings as you are nearing retirement? Not sure I understand your concern. You could just sell vls 80 and buy vls 60 - or whatever you need.

To be fair, that one was more an acknowledgement that I'll need to take that responsibility on board. I don't really see it as an issue.

HarryM1

Having done some further reading, it looks like the "Vanguard LifeStrategy 80%" fund falls under their Mutual Funds category and that I believe requires a Level 2 SIPP. That brings with it in addition to the 0.22% fund charge a fixed £262 a year administration charge if a pot is under 50k and £0 for over 50k. There's also another monthly charge but that only applies to funds from the "SIPPZone" where as the vanguard fund is listed under the Fidelity group.

Requires a bit more thought but it would mean for the first year or so the SIPP with VLS 80% would work out around the same as current pension charge under the SL fund. Then after that would finally drop to 0.22% (+ any vanguard "fund manager" additional charges)

barnstar2077

HarryM1 said:

Having done some further reading, it looks like the "Vanguard LifeStrategy 80%" fund falls under their Mutual Funds category and that I believe requires a Level 2 SIPP. That brings with it in addition to the 0.22% fund charge a fixed £262 a year administration charge if a pot is under 50k and £0 for over 50k. There's also another monthly charge but that only applies to funds from the "SIPPZone" where as the vanguard fund is listed under the Fidelity group.

Requires a bit more thought but it would mean for the first year or so the SIPP with VLS 80% would work out around the same as current pension charge under the SL fund. Then after that would finally drop to 0.22% (+ any vanguard "fund manager" additional charges)

Where are you getting the info about this additional charge from please?

HarryM1

https://lib.standardlife.com/library/uk/slsip20.pdf

Page 5 lists charges as the Fund management charge and then also notes "Additional Expenses" which

May be charged by fund managers to cover other fees, like fees for trustees or registrars. This charge will vary.

So the 0.22% FMC and then things like transactional charges (my Vanguard ISA in the VLS 80% fund for example gets 0.22% + 0.05% charge for a total of 0.27%; not counting platform fee)

Below that is the yearly fee £262 for under 50k and then the monthly fee which I don't think is relevant to Vanguard fund as it notes SIPPZone and the Vanguard fund is listed under Mutual/Fidelity not Mutual/SIPPZone.

That's my current understanding at least, if that's wrong please let me know.

Albermarle

The SL SIPP charges for Level 2 ( that means you can invest in funds other than Standard Life's own funds) are between 0.4% and 0.6% , for the monthly fees.
So it is expensive compared to most other SIPPS and it only restricts you to mutual funds ( usually referred to as open ended funds or OEICS, nowadays )

HarryM1

If the VLS 80% fund is level 2 that's one thing, but if it also comes under the SIPPZone fees, then that makes Vanguards SIPP offering more attractive and also makes a whole lot more sense as it just didn't seem correct that they'd offer a SIPP with funds that only applied the FMC.

What confused me is that on their fund checker, the Vanguard fund is under Fidelity and not under the SIPPZone selection and their Charges document specifically called out SIPPZone for the fee.

If I decide to transfer my Pension to Vanguard, would there be any advantage to first switching to a SL SIPP then selling/buying the VLS 80% fund before doing an in-specie transfer. Is that likely to keep me in the market longer than just requesting a pension transfer that would involve them selling/rebuying as part of the transfer process? Or at least put me more in control of if/when to sell/rebuy?

dunstonh

The transaction charges on investment funds is at fund level.  It doesn't matter what platform you are with.  The transaction charges will be the same.

HarryM1

dunstonh said:

The transaction charges on investment funds is at fund level.  It doesn't matter what platform you are with.  The transaction charges will be the same.

That's good to know, although having had the fees clarified for gaining access to the VLS 80% fund, I suppose it's a moot point now.

With my current fund on SL I'm paying 1.4% in fees (1.1% with discount), if I move to the VLS 80% fund then the fund charge is 0.22% but since it's still in a SL pension, there'd be the "SIPPZone" 0.6% admin fee + £262 fixed admin fee until the pot is over 50k. Even once the pot is over 50k and the £262 fixed admin fee goes away, the +0.6% remains and at best comes down to 0.4% with a pension over 500k, realistically I'm looking at a +0.6% charge for some time and 0.55% for a long time after that. That's 0.82% vs 0.37% on Vanguard. I can't really see a reason to stick around with SL if I do want to move to the VLS 80% fund.

The question is starting to become how to best transfer to Vanguard. If I first switch to a SL SIPP and sell current SL fund/buy the VLS 80% fund, I'm looking at charges of 0.22%+0.6%+£262 which is more or less 1.8% with current 25k pension. Depending on how/when the charges are applied.

That's going to impact whether it's better to buy into the VLS 80% fund under SL then do a in-specie transfer to Vanguard to keep time out of market short and to a time of my choosing, or, sell, transfer, rebuy which could leave me out of the market for who knows how long, or do the transfer and allow the sell to occur during it, which again, who knows how long I'd be out the market for or at which time.

I suppose it's time to dig into their terms and conditions to see exactly how/when charges are applied. I'm slowly getting a clearer picture to help make a decision though, appreciate everyone's input so far.

dunstonh

With my current fund on SL I'm paying 1.4% in fees (1.1% with discount)

That is quite high by SL's standards.  I usually see them around 0.3-0.8% as the typical range.  Only really the older ones or where external funds are used do you normally get above 1%.

but since it's still in a SL pension, there'd be the "SIPPZone" 0.6% admin fee + £262 fixed admin fee until the pot is over 50k.

The SIPP you have is the weakest in pricing in terms of the other SIPPs they have available for retail.

 I can't really see a reason to stick around with SL if I do want to move to the VLS 80% fund.

Agreed.  However, be wary of tied options.  VLS was the best option for low cost multi-asset funds 8-9 years ago.  Other funds could lay claim to that crown today.  By limiting yourself only to Vanguard, where you save on the one hand, could end up costing you more on the other.   History tells us that the best option today will not be the best option in the future.   Using a low cost whole of market solution may well be better.